Report: Mobile customers being sold expensive contracts they don't need

Friday, April 1st 2016by Ellen Branagh

Mobile customers are being sold contracts that are on average 130% more expensive than they need, an investigation by Citizens Advice has revealed.

A mystery shop of the UK’s major providers, commissioned by the charity, found that average monthly tariffs recommended by staff were £23.16 – more than double the price of the most suitable tariff found by the Citizens Advice research (£9.89).

In its report on the findings, Citizens Advice has called for the cost of handsets to be split from the tariff itself, making it easier for consumers to see how much they’re paying for their phone rather than the service.

Mystery shoppers asked sales staff at EE, Vodafone, O2 and Three for a tariff that met ‘average’ needs, including around 250 minutes of calls, 250 texts and 200MB of data a month. They didn’t specify a particular handset.

The results, based on a findings of 350 mystery shops in store, on the phone, or online, discovered a huge variation on the contracts they were offered – some by as much as £40.

With EE, mystery shoppers were offered tariffs varying from £10 to £50.82, while at Vodafone they spanned from £9.99 to £49.99.

O2 offered tariffs between £11.35 and £46, while at Three they ranged from £10 to £40.

According to the research, 40% of the mystery shoppers were recommended tariffs with 1,000 or more inclusive minutes of calls – at least four times more than they had said they needed.

Citizens Advice said the report wasn’t suggesting the contracts had been mis-sold, but the sales focus on handsets and the combination of handset cost with the cost of the service meant it was difficult to know exactly how much they were paying for the phone.

Not enough attention on tariffs

It also means consumers are taking out credit agreements hidden within service contracts, the charity said.

“While we didn’t find evidence of mis-selling, sales pitches were focused overwhelmingly on phone brands which meant not enough attention was paid to tariffs – which are very important.

“The focus on handset brands mean people are essentially taking out loans on expensive phones – but without being able to work out the details of the loan or whether it’s value for money.

“Mobile phones have become an essential product for the majority of people and with many contracts now lasting for years it’s crucial more is done to help consumers get the best deal for them.”

The report calls for the cost of the handset and the tariff to be split across the whole industry, a move some companies have already taken.

It said price comparison websites and phone retailers should give customers the option to search for deals based on consumption, rather than handset.

The report also said Ofcom should identify and develop tools to help consumers understand their consumption and find tariffs that fit their needs, while phone companies should review the incentives staff are offered to make sure they recommend the contract that best meets a customer’s needs.